US Federal Reserve (Fed) Chairman Alan Greenspan on Friday warned that future retirees could have their benefits cut if the US economy's federal budget deficits were not reduced.

The deficits hit 319 billion dollars for the budget year of 2005 which ended on Sept. 30 - the third highest shortfall in the US history.

In a speech taped for a conference sponsored by the Federal Reserve Bank of Philadelphia, Greenspan warned that "the consequences for the US economy of doing nothing could be severe", adding that it was likely that Congress would have to make "significant adjustments" in reducing benefits for future retirees.

Greenspan also said "so long as health care costs continue to grow faster than the economy as a whole, they will exert budget pressures that seem increasingly likely to make current fiscal policy unsustainable."

"The likelihood of growing deficits in the unified budget is of especially great concern because the deficits would drain a correspondingly growing volume of real resources from private capital formation and cast an ever-larger shadow over the growth of living standards," Greenspan added.

Source: Xinhua